Vodafone's tax dispute with the Indian authorities has escalated once more with the mobile phone giant threatening to take the case to the international courts.

It has issued the country's government with a notice of dispute, the first step in seeking international arbitration. The row stems from Vodafone's $10.7bn acquisition of mobile assets in the country from Hutchison Whampoa in 2007, and a disputed tax bill of $2.2bn associated with the deal. Vodafone thought it had won victory in January when the Indian supreme court dismissed the tax demand, but last month the government proposed a change in the law to reopen the claim. Vodafone said in its dispute notice:

The retrospective tax proposals amount to a denial of justice and a breach of the Indian government's obligations to accord fair and equitable treatment to investors. [They] has also raised significant and widespread concern within Indian and internationally.

In a positive day for global markets, Vodafone shares closed 2.5p higher at 172.5p. With a number of upbeat trading statements from US groups such as Citigroup, Coca-Cola and Johnson & Johnson, positive German confidence figures, a reasonable Spanish bond auction and a relatively upbeat assessment of the prospects for the global economy from the International Monetary Fund, the FTSE 100 finished 100.67 points ahead at 5766.95, its biggest one day rise for two weeks. Angus Campbell, head of market analysis at Capital Spreads, said:

The FTSE commenced the session directionless but slowly build up strength as economic data suggested there is light at the end of the tunnel for Europe, and when the US markets opened they simply joined the party assisted by good numbers from Goldman Sachs.

Investors were back on the risk track, pushing banks and mining groups higher. Barclays added 9.75p to 220.55p after Bank of America/Merrill Lynch said it may have turned the corner, with its forthcoming first quarter results set to bring attention back to the fundamentals after recent worries about the effect of the eurozone crisis.

Royal Bank of Scotland rose 0.93p to 25.2p while Lloyds Banking Group was lifted 1.24p to 30.95p. Standard Chartered climbed 54p to £15.53 after traders said Singapore fund Temasek's purchase of 1% of Chinese lender ICBC could put a question mark over its 10% stake in Standard. Any disposal could put the bank in play, they said.

Among the miners Antofagasta added 56p to £11.76 as metal prices rebounded on the more positive economic signs. Rio Tinto rose 77.5p to 3517.5p amid vague speculation of a possible investment in US rare earth miner Molycorp.

But Burberry, down 94p to £14.92, and Marks & Spencer, 9p lower at 35o8.7p, topped the FTSE 100 fallers after disappointing results from the two retailers.

Oil group Soco International rose 10.1p to 296p as Credit Suisse tipped it as a possible bid target. The bank said:

We think [mergers and acquisitions in the sector] will continue, if not accelerate, given the current sustained high oil prices and our view that some exploration and production companies offer high-quality assets and concentrated portfolios that would likely be attractive to integrated oil companies and Asian National Oil Companies (NOCs). Recent trends at the corporate level in the European E&P space over the last 2-3 quarters have been encouraging.

It also picked out Ophir Energy, up 27p at 532.5p, and Rockhopper Exploration, up 4p to 354p, as being attractive to predators.

Software group Sage slipped 3.2p to 283.2p after analyst George O'Connor at Panmure Gordon reduced his recommendation on the business. But O'Connor said there was still the prospect of a possible takeover bid:

Sage is suffering – a poor operating background, primarily in Europe, has been denting its growth ambition, and the structure of the board has left Sage hamstrung and unable to take big steps. Remember, chief executive Guy Berruyer is still very much a new boy who has yet to celebrate his second anniversary and, we think, is not being helped by board. The good news is threefold: (1) the wheels are not coming off; (2) any company looking directionless is going to become the subject of takeover rumour; and, (3) chitchat suggests that Sage is looking to hire now. Whilst we are among Sage's most avid fans and the valuation is not stretched at a PE of 14.6 times, any thoughts of the business moving into an ex-growth mode will shrink the rating to around 12 times. Given the lack of upside, we move from buy to hold.

Elsewhere Dixons Retail rose 0.61p to 17.31p ahead of an analyst visit on Wednesday to a Currys megastore with new chief executive Sebastian James.

Finally Futura Medical rose 3.5p to 101p on talk of a bid for the business. Reckitt Benckiser has been mentioned in the past as a possible predator.